THE US unemployment rate has risen to a 26-year high of 8.5 per cent as employers make deep payroll cuts to cope with dismal economic conditions, bringing the number of jobs lost since the slump began to five million.
Official figures from the US labour department yesterday showed that the rate of joblessness rose by 0.4 percentage points during March as 663,000 jobs were eliminated.
Economists said the grim report provided few fragments of hope. The government revised January figures downwards to show job losses of 741,000, making that month the worst for employment since October 1949.
While experts have spotted the first inklings of improvement in the US housing market and in consumer confidence, the jobs picture remains uniformly bleak.
“This certainly tells us that any green shoots people have been looking for haven’t shown up yet in the labour market,” said Nigel Gault, chief US economist at IHS Global Insight.
“As people lose their jobs, they tend to spend less – and so do people who still have jobs, because they’re concerned that they could be next.”
Early measures of recovery, such as weekly working hours and temporary employment, continue to fall.
Jobs were lost in all categories except for healthcare and education, with 161,000 positions disappearing in manufacturing, 126,000 in construction and 133,000 in professional and business services.
The numbers took the steam out of a recent rally on Wall Street. The White House had been expecting bad news. President Barack Obama’s spokesman, Robert Gibbs, had said: “I think it’s safe to expect – without having seen them – that we’ll see additional severe job cuts in America.”
Since the economic downturn began, the number of jobs lost in the US has reached 5.1 million, the largest decline since troops were demobilised at the end of the second World War.
Large-scale cuts by employers are coming thick and fast. In Detroit, struggling carmakers General Motors and Chrysler, which have already shed tens of thousands of workers, have warned they will have to shut more factories and trim payrolls to satisfy viability goals set by the Obama administration.
The stationery company 3M, which makes Scotch tape and Post-It notes, announced 1,200 redundancies this week and the healthcare supplier Cardinal said it was cutting 1,300 positions.
In another sign of hardship, business activity in the services sector shrank for a sixth successive month during March. The Institute for Supply Management’s index dropped from 41.6 to 40.8, suggesting that orders and inventories continue to weaken.
A jump in home purchases last week fuelled fragile sentiment that the US economy was at least deteriorating at a slower pace, if not bottoming out.
Retail sales are slightly improving and the corporate debt market is beginning to thaw.
Enlivened by the Obama administration's $787 billion stimulus package and by the US treasury's latest plan to clean up banks' toxic assets, the blue-chip Dow Jones index has rallied by 20 per cent since 10 March. But the hike in unemployment proved a harsh sign of more pain to come in towns and cities across the US. – ( Guardianservice)
